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00:00 It's an exciting time for all of us here because we're looking at the spreading of a new government
00:04 and a lot of pushes and pulls domestically.
00:07 But how do you view India in the context of the global space in what is happening in global
00:13 markets right now, Jeff?
00:15 Well, what's really been very interesting I think is if you look at the three big countries
00:21 in the E.M. that had elections last weekend or the weekend, you know, a week ago, all
00:28 of which delivered results which were disappointing I think to the market for various reasons.
00:35 India is the one that's come out quite well from this.
00:37 In other words, the Indian market obviously after selling off initially when the count
00:42 started to come in as opposed to the exit polls has obviously rallied quite nicely and
00:47 the rupee's been reasonably solid.
00:50 And so I think that's a really impressive performance and I think it indicates that
00:54 while there might be some pause in the short term in terms of foreign investors, FII money
01:02 coming into India, they'll want to see the new government put in place, which I understand
01:06 is going on right now, clearly as your program is indicating.
01:11 And I think they want some sort of reassurance that the reform program will move forward,
01:17 even though it may be more challenging than it would have been had the BJP gain a huge
01:21 majority here.
01:23 So I think India still looks pretty good.
01:25 There's a little bit of a show me element I think to it right now.
01:29 But in a world where there are some expensive markets out there, the US being a good example,
01:35 India still looks good as long as we can be pretty sure that this new government that's
01:39 been set up here is going to continue some sort of process of structural reform.
01:44 Okay.
01:46 But would you per se consider India expensive?
01:49 Because I'm asking because a lot of foreign institutional investors, perhaps because of
01:53 the uncertainty of the elections and all of that, ended up selling and they have been
01:58 net sellers broadly over the last couple of weeks.
02:02 Well, I mean, I don't think selling over two weeks is going to eliminate the valuation
02:09 premium that's been in India for a while.
02:12 Now I think it's fair to say that India on conventional metrics, whether you're looking
02:17 P multiples or price to book multiples, et cetera, always looks expensive compared to
02:22 EM as a whole.
02:23 And there's probably very good reasons for that.
02:26 And above all, it's one of the challenges Indian companies have got, indeed any company
02:31 in any market has got, is translating what could be good revenue growth and good economic
02:37 growth more broadly into good EPS growth.
02:41 And I think one of the reasons why foreign investors, I think as you go forward, are
02:45 going to be willing to accept the, should we say, accept the likelihood that India will
02:55 continue to reform and will continue to be an attractive market is because the economy
03:01 is growing so strongly.
03:02 And it's obviously by far the fastest growing emerging market now.
03:07 And I think that is going to translate into foreign interest.
03:10 So even if conventionally it looks more expensive than other markets, I don't think that's going
03:15 to hold it back.
03:16 And that's pretty much been the case over the last, as you well know, over the last
03:20 several years, in fact.
03:22 Absolutely.
03:23 Jeff, thanks so much for joining us this morning.
03:25 And it's going to be an interesting week, to say the very least.
03:28 Thank you.
03:33 (upbeat music)